Displaying items by tag: US

(Washington)

A week ago it didn’t seem like it was going to happen, but nonetheless it is. Trump plans to move ahead with imposing $50 bn worth of tariffs on China starting as soon as tomorrow. The move is expected to bring heavy retaliation from Beijing. Several days ago, China made a conciliatory offer to boost purchases of US goods by tens of billions of Dollars.

FINSUM: We think the US’ approach to link the trade situation to working with China on North Korea is not a very smart angle, as nuclear security and agricultural goods don’t sit comfortably.

(Washington)

The long-awaited, and hotly contested US-North Korea summit between President Trump and North Korea leader Kim went very well yesterday. The summit lasted for hours and resulted in a commitment from North Korea to denuclearize in exchange for the US pledging security guarantees for the country. Trump said the two signed a “very important” document. Trump reported that “My meeting with Chairman Kim was honest, direct and productive … We are prepared to start a new history ... and write a new chapter between our nations”.

FINSUM: For the first time we got the feeling that North Korea has played this whole situation very slyly. They built up nuclear capabilities (probably) simply to have a better bargaining position, and it appears to be working.

(New York)

The US real estate market looks set to change in a big way. Brokers and developers are sensing it, and consumers are making it happen. The change is in the geography of the market. The new SALT limits in the updated tax code mean that wealthy residents of higher tax states like New York, New Jersey, and California, now face much higher tax liabilities. As a response, many of them are seeking to buy homes and domicile themselves in tax-free states like Florida, Texas, or Nevada. One real estate developer in Nevada explains the situation, saying “If you’re a wealthy tech executive from the Bay Area who can live wherever you want and you have a $3 million income, you would have $399,000 a year in savings here. That’s a lot of money to spend on real estate”.

FINSUM: We think this trend will be both long-term and very bullish for markets like south Florida and other sizable metropolitan areas in low tax states . The high tax states might face a reckoning, especially those without a major metropolitan area to suck in residents (e.g. Oregon).

(Beijing)

It looks like Trump’s efforts to put pressure on China over trade might be paying off. In what we think looks like a significant concession, Beijing has just offered to buy an extra $70 bn of US goods if Trump agrees not to impose the tariffs he has threatened. Trump has said he wants China to cut its trade surplus with the US by $200 bn. The $70 bn would mostly go to US agricultural products, energy, and manufactured goods.

FINSUM: China just made an offer that amounts to over 33% of what Trump demanded. That seems like a pretty good step.

(New York)

US investors got a rude shock yesterday: the Dow fell a whopping 391 points. The reason? An election in Italy that occurred several weeks ago led to the president there announcing someone else as prime minister, leading to a political crisis that could see alternative parties come to power. The big question now is whether this is the kind of situation that will blow over in a few days, or whether it is the kind of protracted issue that can ruin a whole summer, such as in 2011 and 2012.

FINSUM: We are worried this could take longer to play out than US investors would like. The big worry here is that Italy might default and then leave the Euro, which could lead to an unwinding of the whole currency. The size of those implications coupled with the complexity of the situation in Italy means this could take some time to play out.